Section 54
This query is : Resolved
27 November 2012
Facts:
Assessee had booked a residential flat when the project was launched vide agreement dated 14-12-2007 . He payed the booking amount of Rs 500000. The total cost was Rs 30,00,000. AS per the terms of the flat agreement the last 2 payments of RS 5,00,000 each were to be made on completion of the project and receiving possession respectively. These payment were made on 09-03-2009. Actual possession as per the letter of possession from builder was on 15-01-2010. The assessee sold another old residential flat on 11-02-2010 for RS 40,00,000 and capital gain of RS 37,00,000.
Query:
Can the assessee take the benefit of Sec 54 for taking exemption of capital gain against purchase of new residential flat as he received possession and made the final payments of the new flat before 1 year of sale of old residential flat.
Logically the assessee cannot sell his old flat until he receives possession of the new flat. As per sec 54 the law states purchase of flat before 1 year of sale, isn't possession of flat a deciding factor for purchase rather than purchase agreement?
Please mention any case laws if available. Thanks in anticipation.
Assessee had booked a residential flat when the project was launched vide agreement dated 14-12-2007 . He payed the booking amount of Rs 500000. The total cost was Rs 30,00,000. AS per the terms of the flat agreement the last 2 payments of RS 5,00,000 each were to be made on completion of the project and receiving possession respectively. These payment were made on 09-03-2009. Actual possession as per the letter of possession from builder was on 15-01-2010. The assessee sold another old residential flat on 11-02-2010 for RS 40,00,000 and capital gain of RS 37,00,000.
Query:
Can the assessee take the benefit of Sec 54 for taking exemption of capital gain against purchase of new residential flat as he received possession and made the final payments of the new flat before 1 year of sale of old residential flat.
Logically the assessee cannot sell his old flat until he receives possession of the new flat. As per sec 54 the law states purchase of flat before 1 year of sale, isn't possession of flat a deciding factor for purchase rather than purchase agreement?
Please mention any case laws if available. Thanks in anticipation.
04 December 2012
rs. 10.00 lacs will only be considered for the purpose of benefit under section 54.
04 December 2012
But Purchase is said to be completed only after possession? Also the earlier payments are classified as mere ADVANCES in the balance sheet. Before the completion of flat, the Residential flat does not exist. Its just a right to allotment of flat. Hence isnt the purchase said to be taken place within 1 year as per the above argument. Please advice. Thanks in anticipation.
04 December 2012
the question is not legally purchased or not. the question is whether the amount of capital gain has been utilised or not.
05 December 2012
But as it is in case of purchase before 1 year there is no question of the capital gain actually been utilized?
07 December 2012
if you want to go by true legal sense then i should tell you that since registered deed has not been made it cannot be treated as purchase in the eye of law.
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